Bitwise Predicts Sideways Bitcoin Move Ahead of 2023 Recovery
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Bitwise predicts that Bitcoin will recover from the current bearish trend in 2023.
Current Bitcoin behavior is consistent with historical price development patterns.
Ethereum Merge, rise of Layer 2 solutions and emergence of new applications will support the next bullish run.
A Bitwise analysis has predicted that Bitcoin will bounce back from the protracted bearish trend. This time, the recovery projects another dimension, different from the usual pattern we have seen in previous cycles.
Bitwise’s prediction is based on Bitcoin’s historical behavior. There has been a pattern since 2011 when Bitcoin started gaining prominence. A diagram in the report shows that every Bitcoin cycle lasts for four years, with the fourth year hosting a pullback.
The pictorial expression suggests that 2022 fits perfectly into the pullback year for Bitcoin, implying that prices will spring back up in 2023, as shown below;
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To support this recovery, Bitwise noted that the impact of industrial developments like Ethereum Merge will reflect this year. Other factors like the rise of Layer 2 solutions, and the litany of new applications developed will motivate a bullish trend for the crypto market.
Bitwise predicts a different approach to the expected recovery. Rather than the usual V-shaped price action, the firm predicts that prices will develop in a U-shaped pattern. That means there will be a sideways price movement before the rally kicks in.
Factors identified to alter the pattern include the various challenges faced by the industry in 2022. Setbacks like the FTX debacle and other crypto credit challenges shook investors’ confidence in the past year. Impending regulation and severed banking relationships were noted as factors that would make investors skeptical.
The planned release of 127,000 Bitcoins as part of the Mt. Gox settlement is another issue that Bitcoin has to face. It is an event that could unsettle the market dynamics. In addition, the existing distress in the Bitcoin mining industry, a fallout of China’s clampdown on crypto continues to loom.
These elements helped to form the opinion that Bitcoin price will likely move sideways, with a possibility of another leg down, before it eventually recovers. However, Bitwise believes that Bitcoin will bounce back. Based on history, it suggests the coming recovery could be the biggest yet that the industry has experienced. Perhaps, a new all-time high will be the icing on the cake when this happens.
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